What is a debt-for-nature swap?
A debt for nature swap is a deal that is meant to preserve the environment in developing countries. At the same time, it is supposed to help the developing country by reducing the debt that it owes to richer countries.
Much of the world’s unspoiled natural area is located in developing countries. These are places like the Amazon rainforest in Brazil. One reason why these areas are still unspoiled is because their countries have not yet developed and done things like cutting down forests as the US and European countries did long ago. The problem is that many of these areas are now under threat. The people of the developing countries are starting to want to use the land for intensive economic purposes. For example, people in Indonesia might cut down rain forest in order to plant palm trees for oil that can be sold. The developing countries see those natural areas as untapped resources that could help them to improve their economies.
Meanwhile, many people in the rich world feel that it is important to protect areas that are still unspoiled. They want to do this for the sake of biodiversity, in order to help prevent global warming, and for other reasons. However, they realize that the developing countries could be hurt economically if they fail to develop those natural areas. For this reason, debt for nature swaps were invented. In such swaps, a developed country promises to forgive some of a developing country’s debts if the developing country will protect a given natural area. Because practically all developing countries are in debt to developed countries, this can really help them.
A debt for nature swap, then, is a deal that forgives a poor country’s debt in exchange for that country’s commitment to protect a given area of its environment. This deal helps to preserve the environment without harming the developing country economically.